PERSONNEL AND ORGANISATION
The number of employees as of 30 September 2018 amounted
to 2,571 (2,469) of whom 52 % were female and 48 % male.
Of the total number of employees 578 (590) work in the production.
The production contained within New Wave Group is attributable
to Ahead (embroidery), Cutter & Buck (embroidery), Dahetra,
Orrefors Kosta Boda, Paris Glove, Seger, Termo and Toppoint.
INTANGIBLE ASSETS
INVESTMENTS, FINANCING
AND LIQUIDITY
The Group’s intangible assets with indefinite useful life consist
of goodwill and trademarks. The useful lives are assessed to be
indefinite because they are well established strategic brands in
respective markets which the Group intends to maintain and
develop further. The brands with greater value are listed at their
acquisition values and are well-known brands such as Orrefors
Kosta Boda within Gifts & Home Furnishings as well as mainly
Cutter & Buck within Sports & Leisure. The value of the group’s
goodwill and trademarks, which are based on local currency
and can give rise to currency translation effects in the consoli-
dated financial statements, have been allocated between the
cash-generating units they are considered to belong. These units
are also the Group’s segments. The value of these intangible assets
is reviewed annually to ensure that the value does not deviate nega-
tively from book value, but can be tested more frequently if there are
indications that the value has decreased. In order to assess whether
there are indications of impairment, the recoverable amount needs
to be determined by a calculation of the respective cash-generating
unit’s value in use. The value in use is based on established cash
flow projections for the next five years, and a long-term growth
rate, so-called terminal period. The most important assumptions
in determining the value in use include growth, operating margin
and discount rate (WACC). When discounting, an assessment of
financial factors such as interest rates, borrowing costs, market
risk, beta values and tax rates will be carried out. As the cash gene-
rating units have different characteristics, each unit is assessed
after its commercial factors. The estimated cost of capital (WACC)
is considered to be representative of all cash generating units.
The third quarter's cash flow from operations amounted to
SEK -83.0 (-10.4) million. The lower cash flow is partly attribu-
table to a lower operating result and partly that the Group has
had a higher influx of goods. Cash flow from investment activities
amounted to SEK -42.1 (-36.9) million.
Cash flow from operating activities for the first nine months of
this year decreased and amounted to SEK 48.2 (73.2) million.
This is mainly attributable to the fact that the Group has had
a higher influx of goods during the period. Cash flow from
investment activities amounted to SEK -123.5 million which
is SEK 50.7 million higher than last year (SEK -72.8 million).
The increase is primarily related to investments in distribution
centers and IT.
Net debt increased by SEK 188.6 million and amounted to
SEK 1,910.5 (1,721.9) million. However net debt in relation to
shareholders' equity and working capital has decreased and
amounted to 58.4 (60.7) % and 59.4 (61.7) % respectively.
The equity ratio was on par with last year and amounted to
47.7 (48.0) %.
The Group signed a new funding agreement as of 11 April. The
total credit line of this agreement as of 30 September amounted to
SEK 2,774 million, of which SEK 2,000 million runs until March
2022 and USD 31 million has a term extending January 2024. The
other SEK 500 million has a term of between three months and
six years. The credit facility amount is limited to and dependent
on the value of some underlying assets. The funding agreement
means that financial ratios (covenants) must be fulfilled in order
to maintain the agreement.
The cash-flow forecasts which are made in the examination are
based on the five year forecast adopted by the Board (2018-2022)
and thereafter a terminal growth of 3 (3 %). In calculating the
present value of expected future cash flows, a weighted average cost
of capital (WACC) of 10.3 (10.3) % before tax is used.
Based on the tests and analyses carried out, there is, in the current
situation, no need for impairment. Nor were there any need for
impairment for the comparison year.
Based on the present forecast, management estimates that the
Group will be able to meet these covenants with sufficient margin.
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